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Demonstrators held a banner protesting Deval L. Patrick’s connection to Coca-Cola at a Patrick fund-raiser in Boston on Thursday. From 2001 to 2004, Patrick was the general counsel responsible for global legal affairs for Coca-Cola.
Demonstrators held a banner protesting Deval L. Patrick’s connection to Coca-Cola at a Patrick fund-raiser in Boston on Thursday. From 2001 to 2004, Patrick was the general counsel responsible for global legal affairs for Coca-Cola. (Patricia McDonnell for the Boston Globe)

Patrick's path from courtroom to boardroom

For Deval L. Patrick , the transition from hotshot civil rights lawyer to corporate executive began in 1998 with a phone call from an unlikely source.

On the line was Peter I. Bijur , CEO and chairman of Texaco Inc., whose employment practices Patrick was monitoring as head of a court-approved task force created as part of a $176 million racial discrimination case Texaco had settled.

Bijur offered him the job of general counsel, Patrick recalled. ``I said, `I'm not even sure we should be having this conversation,' " Patrick said.

He reported the conversation to US District Court Judge Charles L. Brieant , who was still monitoring the case. The judge approved his job talks with Texaco, Patrick said, and then offered advice.

``I told him he could do a lot of good as part of the leadership of the company," the judge, a Nixon appointee in 1971, said in an interview last week.

Patrick assumed the post in 1999, the first of a series of positions that in seven years took him from the courtroom to the executive suites and boardrooms of controversial corporate behemoths Texaco, Coca-Cola, and Ameriquest Mortgage Co. The transition made the Milton Democrat a wealthy man and a target of harsh criticism by activists and one of his two opponents in the gubernatorial primary, Attorney General Thomas F. Reilly . Basically, the critics accuse Patrick of enriching himself in the service of greedy companies that engaged in unscrupulous business practices, including exploitation of minorities.

It's a picture that doesn't square with Patrick's image as a civil rights crusader in private practice, at the NAACP Legal Defense Fund, and as chief of the Civil Rights Division of the Department of Justice in the Clinton administration.

Patrick says it's also a picture that grossly distorts reality. Vigorously defending his conduct, he said in an interview he took on challenging jobs and improved the companies' practices along the way.

``I've fixed hard problems of all kinds, civil rights and business problems," Patrick said. ``It's the stuff I like to do, and I'm good at it, as a matter of fact . . . and I never left my conscience at the door.

``So I should go and become the general counsel at Coke and take on all those headaches and say I'm going to do this for free?" Patrick said.

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``It makes some people uncomfortable because they think I belong in a certain box," he said. ``In the view of some people, you can only believe in civil rights if you work as a civil rights lawyer. I just don't buy that."

In the top legal job at Texaco and Coca-Cola, Patrick defended the companies against accusations of environmental and human rights abuses in South America. On the board of the parent company of Ameriquest Mortgage Co., Patrick was ``the point man," between the parent company's board of directors and an Ameriquest negotiating team to settle a $325 million predatory lending case in 49 states and clean up the company.

Patrick acknowledges that financial exploitation of the poor, elderly, and minorities were pervasive at Ameriquest, the stories often ``horrific." In May, after months of Reilly and his campaign flogging the issue, Patrick resigned his $360,000 a year board position, saying Ameriquest was ``on a path to be a better, more responsible company." The resignation was effective July 1.

His time at Coca-Cola resurfaced last week when Ray Rogers , a New York-based labor activist-consultant, brought his Campaign to Stop Killer Coke to Massachusetts along with leaflets attacking Patrick. The main allegation is that Coca-Cola allowed bottling companies in Colombia to conspire with right-wing paramilitaries who killed and intimidated labor union leaders. Coke has adamantly denied any role, and no evidence has surfaced to link the soft drink giant to the violence.

Starting in February 1999, Patrick spent a little over two years as general counsel and vice president of Texaco, then the third-largest US oil company. Most of his legal efforts were devoted to exploring and working out a merger, ultimately announced in October 2000, with larger Chevron Corp. But Patrick as gubernatorial candidate has been asked mostly about allegations of Texaco's culpability for severe soil and groundwater contamination and health problems around its former oil operations in the remote rain forest of Ecuador.

The issue predates Patrick's service at Texaco by seven years and continues today in suits filed in courts on two continents. Under Patrick, the company successfully fought the transfer of a major case from Ecuador to US courts. The action was a class-action suit on behalf of 30,000 peasants and Indians residing in the Amazon region.

Why move the case? Critics say the US courts would be tougher on Texaco. Patrick's response: He said the case should be tried in Ecuador ``because that's where all the people and documents and the sites are."

Amherst lawyer Cristobal Bonifaz , a native of Ecuador, who has been engaged in a 13-year battle against Texaco and now Chevron, said it was a tough fight, but he said Patrick did meet with him for a day in an unsuccessful attempt to settle the case.

``Was he a player making the decisions? No, it was made before he came into power," said Bonifaz, whose son, John, assisted him at times and is now running for secretary of state. ``But thousands of Indians have died because of this, and if you're going to support this, you have to take another look at yourself."

Texaco and Chevron have maintained that they were not at fault for the pollution or resulting health problems. ``There is no credible evidence to support claims of causation or even that there are higher levels of cancer there than in other parts of the country," company spokesman Chris Gidez said. Texaco's extraction methods met industry and Ecuadoran standards at the time, as did a $40 million cleanup in the 1990s, done by Texaco and signed off on by the government after Texaco ended its operations in Ecuador in 1992, he said.

Since then, Petroecuador, the national oil company that had been Texaco's majority partner, has operated the sites, and a Colombian court has been reviewing tests of soil and water samples from 122 Texaco sites as part of the continuing suit filed on behalf of the plaintiffs.

A trial, which could last another two years, began in October 2003 in a one-room courthouse in a frontier town in Ecuador and has focused on a systematic evaluation of soil and water samples around 122 sites. Texaco operated all the drilling sites, but under the terms of its exit agreement was responsible for cleaning up about a third, reflecting its 36.5 percent ownership interest. As of last week, 42 sites had been tested to determine whether Texaco's cleanup effort was sufficient.

If Patrick wanted to stay on after the Texaco-Chevron merger, he would have to move near Chevron headquarters in California, so when Coca-Cola approached him about a job, he jumped to the Atlanta-based beverage giant. Serving from 2001 to 2004 at Coke, Patrick was never far from the center of the storm during a turbulent period of Coke's history and was one of several top executives to resign.

Patrick said he quit as a matter of principle after Coke chief executive Doug Daft , who had already announced his retirement, reneged on a decision to authorize an independent investigation of charges of company complicity in labor violence at bottling plants in Colombia. A company spokesman last week declined to comment.

But the circumstances surrounding his departure have been murky. A company announcement in April 2004 implied he would be replaced immediately. It was amended three days later with a second memo noting that he was staying in his post for another eight months. A Wall Street Journal story, without named sources, suggested the company's high-powered board of directors was unhappy with Patrick's handling of federal inquiries into accounting irregularities raised in a whistleblower's suit.

``If there was somebody on the board who was unhappy with him, it was never expressed to me," said Peter Ueberroth , a Coca-Cola board member since 1986. Ueberroth, a California businessman and former commissioner of Major League Baseball, said in a Globe interview that Patrick ``served with distinction" during difficult times and was ``a quality guy."

Patrick said he was blindsided by the announcement he was leaving, because he had submitted his resignation a month earlier, effective in December 2004, but was asked to delay disclosing it.

``I was attempting to leave gracefully," he said. By resigning, he said, he forfeited ``many millions" of dollars in stock options. A subsequent $2.1 million consulting agreement, which he was paid for last year, was worth much less than he would have been entitled to had he been fired under the terms of his original five-year contract, Patrick said.

As for the federal investigations, Patrick remarked: ``I don't see why anybody could be unhappy. We had the [Securities and Exchange Commission inquiry] resolved without a fine and the [US attorney's] criminal investigation closed without any charges." Both resolutions were announced in April 2005, after he had stepped down as general counsel. Coke also agreed to take some undisclosed steps to strengthen accounting controls.

But the company did acknowledge other problems flagged as a result of two suits brought by whistleblower Matthew Whitley , a company finance officer who was laid off after informing superiors of rampant irregularities.

Whitley, who sought $44 million in damages for wrongful termination, settled with Coca-Cola for $540,000, mostly legal fees, in October 2003.

Now working as capital manager for Gwinnett County in Georgia, Whitley said Patrick took him very seriously.

``He was truly interested in getting to the bottom of the nature of my allegations," Whitley said. ``He had the best interests of the shareholders and Coca-Cola at heart, and he was the only one I'd say that about."

Still unresolved is the issue of labor violence in Colombia at plants owned by Coke's bottling partners. Chronic violence by paramilitaries against trade unionists of all types has plagued Colombia for decades, and the Campaign to Stop Killer Coke website lists eight activists at four Coca-Cola bottling plants slain in Colombia between 1989 and 2003. ``Hundreds of other Coke workers have been tortured, kidnapped, and/or illegally detained by violent paramilitaries, often working closely with plant managements," the site states.

Coca-Cola has maintained that it was not complicit , adding that it provides good paying union jobs in a country where they are scarce. The bottlers also provide special security measures for union leaders, Coke said.

In a 2001 federal lawsuit brought in Miami by US-based labor groups on behalf of the estate of one of the murdered workers, Isidro Gil , and a Colombian union, Coca-Cola was dismissed in 2003 as a defendant because a judge ruled it did not dictate policies at plants owned by its bottling partners. Charges against two bottling companies are still pending, however.

Patrick, who was Coke's counsel at the time the company was dismissed as defendant, said in a recent interview: ``When the union was asked by the court to give one fact on the basis of which you make that allegation, they couldn't. That's why the Coca-Cola Co. was dismissed. That's the right legal outcome."

Coke, however, says it will now cooperate in a third-party investigation by the International Labor Organization, the type of review Patrick sought before his resignation.

``My view was that either of two things would happen," Patrick said. ``Either that independent investigation would confirm what we had found with our internal investigation, or we would find something we didn't know, in which case we needed to know and the bottling company needed to know it and deal with it."

In spring 2004, when he was approached to join the board of ACC Capital Holdings, Patrick was quite familiar with the history of its subsidiaries' predatory lending habits. In 1996, when he was in the Clinton administration, his department brought suit against Ameriquest's corporate predecessor, Long Beach Mortgage Co., which paid $4 million to settle charges of discrimination based on race, gender, age, and national origin.

``The founder [Roland Arnall], who was still the chairman, called and said he needed some help," Patrick recalled. ``He said: `We've started to make some changes and we're under investigation' -- I think at that point it was by maybe a dozen attorneys general -- `and we need to settle those and make these changes, and that's where you come in. The investigation is a platform for change.' "

(Arnall, a billionaire, was a leading fund-raiser for President Bush, who named him ambassador to the Netherlands. Patrick wrote a letter in support of Arnall.)

California-based Ameriquest is the nation's largest lender in the so-called subprime market for customers whose poor credit prevents them from borrowing from traditional lenders. Patrick joined the five-member board in summer 2004.

The number of states chasing Ameriquest would grow to 49, and last January, the company agreed to a $325 million settlement that includes internal changes and an independent monitor who will conduct annual audits. About $12.2 million was designated for Massachusetts customers.

Patrick was appointed by the board to be the liaison between the negotiating team and the parent company's board of directors, according to his campaign. A Patrick spokesman earlier this year said that Patrick participated in `` four or five normal briefings" for board members during the year-long settlement negotiations and also took part in ``four or five" special briefings and conducted ``regular" phone discussions.

``I was very involved," Patrick said. ``Don't get me wrong. I was not at the negotiating table. That was not my job. But I was the point person for that matter on the board, and the legal team reported directly to the board."

The biggest issue was not the money, Patrick said, but controlling activities in myriad Ameriquest offices. ``It was a completely decentralized company; they were cowboys and cowgirls. We made another decision to consolidate operations in four regional centers and close the branches. It was painful and destructive, but it was what it takes to get control of the operation."

In the process, the company cut about 3,800 jobs nationally, an estimated 40 to 90 of them in the Bay State.

Reilly, Patrick's political rival in the governor's race and one of the attorneys general who pressed the case against Ameriquest, has called the lender ``a very bad company engaged in despicable practices."

In May, when Patrick announced his resignation from Ameriquest, Reilly remarked: ``I find his mission accomplished declaration very troubling because there is no evidence that this predatory company has changed."

Others who follow the case closely, however, have a different view. ``I think their practices have changed. I think they've made attempts to change the culture," said six-term Iowa Attorney General Tom Miller , the lead attorney general in the case. Miller said he exchanged pleasantries with Patrick once but is unaware of his role in the case.

``I never felt his presence during negotiations," Miller said.

The monitor in the case, former four-term Mississippi attorney general Mike Moore said he has already seen ``a remarkable change" in Ameriquest. ``They shut down every single branch in America . . . and pretty much fired and removed everyone who was part of that sales culture," said Moore, who won't begin his formal auditing until March.

``I'm convinced they're on a road to change just because they've changed their entire culture," Moore said.

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